Vietnam is South-East Asia's fastest growing PC market

It will be based in the Saigon Hi-Tech Park outside Ho Chi Minh City and will initially employ about 1,200 people.

It is believed to be the biggest investment yet by a US company in Vietnam, and will raise the country's profile as a hi-tech business location.

The plant will package chips into devices and test them before shipping them on. Intel has similar sites in China, Malaysia and the Philippines.

Expansion plans

Intel chairman Craig Barrett said the factory was only the first stage of his company's investment in the country.

The company already has a programme to provide computer training to more than 30,000 Vietnamese teachers and is helping the government set up wireless computer access to rural areas of the country.

The Vietnamese factory is part of a $6bn worldwide expansion programme Intel is rolling out this year.

Vietnam has been one of Asia's fastest growing economies in recent years, and has been trying to diversify its economy by attracting hi-tech investors.

But it has been criticised for its poor infrastructure, too much bureaucracy and widespread corruption.

Vietnam is opening up to world markets

It is currently negotiating to join the World Trade Organization and has taken steps to reform and open up its markets.